TCL Electronics (01070) handed over a 2023 performance questionnaire with a high “gold content” on March 28.

According to financial reports, the company achieved annual revenue of HK$78.99 billion, up 10.7% year on year; overall gross profit increased by 12.5% year on year to HK$14.76 billion, overall gross margin increased 0.3 percentage points to 18.7% year on year, net profit to mother reached HK$740 million, up 66.4% year on year, and adjusted net profit to mother of HK$80 million, up 14.0% year on year.

In terms of business, in 2023, all business segments of TCL Electronics achieved overall growth. Among them, the company's smart screen business revenue reached HK$48.63 billion, up 7.6% year on year; overall revenue from the Internet business reached HK$2.76 billion, up 20.2% year on year, and gross margin increased 4.6 percentage points to 55.1% year on year; revenue from innovation business increased 78.5% year on year to HK$18.64 billion, of which PV business revenue increased sharply by 1820.3% year on year to HK$6.30 billion, and achieved profit.

From a financial perspective, TCL's business grew steadily and attracted the attention of global investors. On January 29, after TCL Electronics released the 2023 global smart screen shipment data, the company's stock price fluctuated upward and rose to HK$3.27 in February, up more than 50% from the January low of HK$2.16. According to data from the Zhitong Finance App, Southbound Capital has continued to increase its holdings of TCL Electronics since the beginning of the year. By the close of trading on March 28, the number of shares held by Southbound Capital had reached 131 million shares, with a shareholding ratio of 5.19%.

Consolidate the foundation of the supply chain and steadily advance globalization

According to the Zhitong Finance App, investors are increasing their purchasing power for TCL electronic stocks, and what is certain is the company's ability to win in global competition in the medium to long term.

Take Smart Screen as an example. In 2023, TCL's global shipments reached 25.26 million units, bucking the trend of 6.2% over the previous year. According to the “Global TV Brand Market Quarterly Shipment Tracking” data released by Lotu Technology, in 2023, global TV market brand shipments were 201 million units, down 1.6% year on year, hitting a new low of nearly 10 years.

According to Omdia data, TCL's smart screen shipment market share steadily increased from 5.6% in 2015 to 12.5% in 2023, ranking among the top two in the industry. According to the latest reports from GFK and Circana, in 2023, TCL Smart Screen's shipment market share ranked in the top five in nearly 30 overseas countries and regions. With the steady increase in TCL's smart screen market share, the competitive pattern of the industry is becoming more and more clear. This is undoubtedly a positive sign for investors who want to “win and then fight”.

The development trend of the TV industry and the reason why TCL Electronics has been able to maintain a leading position in the global smart screen market for a long time is first based on the company's establishment of a stable supply chain advantage. As Japanese and South Korean manufacturers such as Samsung, LGD, and Panasonic have successively withdrawn from the LCD TV panel market, Chinese companies, represented by TCL Huaxing, are strongly entering the panel industry and gradually seizing their right to speak. According to Omdia data, the global market share of LCD TV panel manufacturer shipments in mainland China reached 67.5% in 2023.

You need to know that the cost of a panel accounts for about 50% of the total cost of a TV. If the price and supply of panels are not stable enough, it will directly affect the profitability and shipment volume of TV manufacturers. Between overseas panel manufacturers and panel manufacturers in mainland China, cyclical fluctuations in panel prices have been weakened, supply stabilized, and advantages such as integration of the Chinese TV brand industry chain and scale effects have become more prominent, driving a continuous increase in market share. As a leader in the global TV industry, TCL Electronics and TCL Huaxing have formed two-way empowerment in R&D and supply, which is more conducive to creating innovative products in all scenarios that meet consumer needs.

In addition to this, TCL's electronic photovoltaic business has ushered in explosive growth. It is also based on the company's full utilization of industrial synergy advantages, with a complete upstream photovoltaic industry chain, rich financial partner resources, abundant industrial and commercial project reserves, and channel coverage and penetration advantages accumulated over many years in China. In 2023, TCL's electronic photovoltaic business covered 20 key provinces and cities in China. More than 70 new industrial and commercial contracts were added during the year, more than 500 new distribution channel vendors were added, and a total of more than 40,000 farmers were signed. In the overseas photovoltaic market, the company has achieved product launch. In the future, it will strive to enter leading optical storage distributor and installer channels in key overseas countries as soon as possible to build a complete product matrix on a global scale.

“R & D is king” High-end innovative products are significantly released

It should be noted that as a “leading smart terminal enterprise operating globally”, building a solid foundation in the global supply chain is still only a compulsory course. Especially at a time when the growth of the global smart screen market is weak, how the company can develop differentiated and innovative products, stimulate new demand, and explore a new “blue ocean” is a top priority.

The Zhitong Finance App learned that in recent years, TCL Electronics has adapted to the “high-definition, large-screen, and intelligent” development trend of smart screens.

Continuously strengthen R&D investment in display technology, human-computer interaction, operating systems, audio and video, 5G and artificial intelligence, etc., and continue to build the internal logic of high-end products through high investment. Help the company accelerate its transformation to intelligence and technology.

In the field of display technology, TCL Electronics used mini LED technology as a breakthrough and achieved technological fault leadership. In 2019, TCL Electronics pioneered the launch of the 8K Mini LED X10 smart TV, becoming the first television company in the world to mass-produce Mini LED products. Since then, the company has also successively launched many products that shocked the world, including the world's largest 115-inch QD-mini LED smart screen, which has been sought after by global consumers.

In 2023, global shipments of TCL Mini LED smart screens increased by 180.1% year on year, and global shipments of quantum dot smart screens increased by 116.1% year on year; according to Zhongyikang omni-channel data, TCL Electronics's high-end products, TCL Mini LED smart screens and quantum dot smart screens ranked first in omni-channel retail sales and retail sales in the Chinese market.

According to the Zhitong Finance App, TCL Electronics' “high-end and large screen” product strategy promotes the optimization and upgrading of the company's product structure, frees smart screen products from low price competition, enhances profitability, and helps the company create more resources to dig deeper into user experience and build a mental brand.

For example, in addition to smart screen products, TCL Electronics, as an innovator in the OTT field, developed and launched the smart screen system “Smart Control Desktop”, which takes into account design aesthetics, innovative technology and user experience, effectively solves problems such as difficult operation of traditional TV interfaces, further meets the individual needs of different family members in different scenarios and enhances the user experience. At the same time, the company also launched the Internet TV industry's first customized content section generated by AI model technology — the “Super Smart Drawing” AI story collection, which efficiently empowers smart terminal content and interaction through innovative technology. In the future, the company will expand the scale of vertical and innovative businesses such as music, games, education, children, and app stores by enriching platform content, and continue to enrich large-screen content application scenarios.

In addition, Thunderbird Innovation, which was successfully incubated by the company, launched new consumer AR glasses such as Thunderbird X2, X2 Lite, and XR glasses Thunderbird Air 2. As of December 31, 2023, Thunderbird Innovation ranked first in the domestic consumer AR glasses online market share.

It is best to keep an eye on customs for a long time. Returning to the perspective of the secondary market, as the fundamentals of TCL Electronics ushered in a series of positive and positive changes, the market clearly needed to re-examine the company's value logic. After all, the intrinsic value of a company reflects the fundamentals of the enterprise. As the company's performance further enhances and the financial situation continues to improve, TCL Electronics is expected to achieve a new leap forward driven by value revaluation.